Obama budget: Record spending, record deficit

President Barack Obama is seen on the White House YouTube channel Monday on a computer screen at the White House in Washington, answering video and text questions submitted by YouTube.

President Barack Obama is seen on the White House YouTube channel Monday on a computer screen at the White House in Washington, answering video and text questions submitted by YouTube.

Photo: AP2010

Obama budget: Record spending, record deficit

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WASHINGTON - Spelling out painful priorities, President Barack Obama urged Congress on Monday to quickly approve a huge new shot of spending for recession relief and job creation, part of a record $3.8 trillion budget that would boost the deficit beyond any in the nation’s history while only slowly beginning to put Americans back to work.

If Congress goes along with Obama’s election-year plan, the nation would still end the year with unemployment pushing double digits at 9.8 percent and government red ink deepening to $1.56 trillion, by the administration’s accounting.

The plan calls for tax cuts for workers and business and more aid for state governments and the unemployed. The jobs initiative largely mirrors last year’s stimulus bill, but is about one-third its size. The president is asking for nearly $300 billion for recession relief and job stimulus.

The budget paints a remarkably dire picture of a federal government that will have to borrow one-third of what it spends next year as it runs a deficit that still would total some $1.3 trillion.

At the same time, Obama is acutely aware that persistent joblessness is the issue most likely to spell political trouble for Democrats in this year’s midterm elections.

The president’s budget plan sees the deficit coming down by nearly $300 billion next year, and he’s offering more than $1 trillion in deficit reduction proposals over the coming decade.

Republicans weren’t impressed with the proposals.

“They’re doing ideas that create perception but don’t do anything big,” said New Hampshire Sen. Judd Gregg, senior Republican on the Budget Committee.

Obama’s budget proposed a job creation tax credit of up to $5,000 for each new worker that businesses hire, another round of one-time $250 checks for senior citizens on Social Security, extended unemployment benefits and health insurance subsidies for the jobless, and an extended $400 tax credit for most workers through 2011.

While White House Press Secretary Robert Gibbs spoke Sunday of a $100 billion jobs initiative, these “temporary recovery measures” in fact total $282 billion through the autumn of 2012, according to budget documents.

“We simply cannot continue to spend as if deficits don’t have consequences, as if waste doesn’t matter, as if the hard-earned tax dollars of the American people can be treated like Monopoly money, as if we can ignore this challenge for another generation,” Obama said.

He would extend most of former President George W. Bush’s tax cuts for middle-income earners. Married couples making more than $250,000 and individuals making more than $200,00 would see their marginal tax rates rise to as much as 39.6 percent and also lose some of the benefits they take on itemized deductions like mortgage interest.